Saudi Arabia works on convincing Russian Federation to join oil cuts

Posted - December 07 201803:19

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Saudi Arabia works on convincing Russian Federation to join oil cuts

USA senators say, after a briefing with intelligence services, that they are convinced Saudi Arabia's de-facto ruler, Crown Prince Mohammed bin Salman, was involved in Khashoggi's death. It fell further on Thursday after OPEC's lack of action and amid broader concerns about global economic growth.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said USA crude inventories rose by 5.4 million barrels in the week to November 30, to 448 million barrels, in a sign that United States oil markets are in a growing glut.

The Organisation of the Petroleum Exporting Countries (OPEC) is meeting at its headquarters in Vienna, Austria, on Thursday to decide its production policy. Delegates said details of how to share that out and the extent of the contribution from non-OPEC allies remained unresolved.

Negotiations between OPEC members are fraught, as some feel that Saudi Arabia wields too much clout in setting policy. It has wanted an exemption. Its cooperation with Russian Federation shows how much OPEC has changed since 2016 when the two countries ended their historic animosity and started to manage the market together.

"Yes, we will have a cut", Oman's oil minister Mohammed bin Hamad Al Rumhi said on Wednesday evening. "I think that's the fair and equitable solution".

Oil ministers from 20 or so countries are in Vienna for two days of meetings - first, the 15 members of OPEC, then a wider group including countries outside the cartel.

The group is under pressure after a collapse in oil prices last month.

International Brent crude oil futures were at $61.37 per barrel at 0240 GMT, down 71 cents, or 1.1 percent from their last close.

The fall in the price of oil will help many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing.

Moscow has shown willingness to cooperate with OPEC to cut oil production.

Yesterday, the US President tweeted: "Hopefully OPEC will be keeping oil flows as is, not restricted". This comes as USA crude oil is now trading at $53 a barrel, which is down from a four-year high.

Possibly complicating any Opec decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Some experts say that gives the USA some leverage over the Saudis, though Al-Falih denied that on Thursday.

"The number that we need is going to be less than 1.3 [million]".

Representatives from some of the world's top oil producers are due to meet on Thursday in Vienna, following a recent decline in the price of the commodity. "This sits against a backdrop of rapid non-OPEC production growth - 2.4 million barrels per day year-on-year in 2018 and 2019, due mostly to gains in the U.S. output over both years".

"We assume a cut of around 1.0 million barrels per day in the first quarter of next year, using October 2018 production levels as a reference".

"The stakes are high now for OPEC". "OPEC and Russian Federation will be very careful about voluntary "blood letting". Washington also gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favour of a cut.

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"I don't sleep well after many games, really, but we have got a game on Wednesday and I will show people what I can do", he said. Robbo I think has a dead leg, his hip, so in the moment we have to see.

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Twitter handles were abuzz with the news break."It is better if OPEC breaks, free market may stablise oil prices ", read a tweet. OPEC is dominated by oil-rich Saudi, which along with its allies has had no ties with Qatar since June 2017.

The House hasn't moved on the issue, and Speaker Paul Ryan last week said the Yemen resolution "isn't the way to go". They said the "whole world is certain that he ordered a bad crime against the journalist Jamal Khashoggi ".

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